An evaluation of the impact of income taxation on the growth of small and medium sized enterprises in Zambia

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Nsama, Mwandu
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The purpose of this dissertation was to evaluate the impact of income taxation on the growth of Small and Medium Enterprises in Zambia. It made an attempt to establish the effectiveness of maintaining compliance to the current tax policy by SMEs in Zambia. Furthermore, the research sought to establish whether the laws and the policies governing the regulation of Small business enterprises encourage them to formalize. The essay also sought to establish the impact of regional and international aspects of income taxation on SME regulation and development in Zambia.Through research, it was found that the majority of SMEs in Zambia are informal and many have maintained the status quo arguing that the tax system creates an unnecessary burden on their operations. Furthermore, it was found through research that there is need for income taxation to be imposed so as to encourage SMEs to formalize. It was also found that there are other non-tax barriers to the growth of SMEs which are connected or incidental to income taxation.Furthermore, it was also established that there is need to strengthen the formulation and implementation of the Micro, Small and Medium Enterprise Development Policy in Zambia so that it is in line with regional and international standards. Considering the fact that SMEs make up a considerable portion of the private sector the dissertation recommends that the sector needs to be encouraged to grow and the various policies and pieces of legislation that affect the regulation of SMEs must be reviewed to ensure that they adequately promote the growth of SMEs. This is because SMEs have a number of advantages to the national and global economy which include job creation, poverty reduction and the equitable access and distribution of social goods.
Effects of Taxation on , Local Taxation